North Dakota, oil industry in dispute over royalty payments

A North Dakota agency is trying to collect millions of dollars in oil and gas royalties that it says is owed to the state.

The dispute began after the North Dakota Department of Trust Lands discovered during a recent audit that some oil companies allegedly took improper deductions for transportation, processing and other costs out of royalties owed to the state, The Bismarck Tribune reported .

The North Dakota Petroleum Council, which is an industry group, disagrees with the department's evaluation of the leases, which date to 1979. It contends that the department is changing its policy.

"This is going to be in litigation," said Ron Ness, the council's president. "It's obviously a huge issue."

The department audited 10 of 19 companies that incorrectly paid the state royalties on oil production from 2012 through 2014.

The amount of money owed to the state is still being determined, but state Land Commissioner Lance Gaebe said it's in the millions.

Companies that passed the audit paid about $20 million to $45 million more than they would have if they calculated payments incorrectly from 2012 through 2017, estimated the department's director, Taylor Lee.


Information from: Bismarck Tribune,